Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 2)
The SPX Index ended 2024 with a down 43 bp session, closing the year out at 5881.63. The Index once again tested the 5864 support level, hitting a low for the day at 5868. The Index had a tremendous 2024 with a return of 24% but December seemed to shift a bit against that grain, marking down 2.5% for the month. Market internals continue to fade. Near term trend is broken. Spot VIX and VIX Term Structure (slope) are flashing warning signs. The ICAP Momentum/Trend (MOTR) Model signal remains Negative. My model and data points suggest the Index is set up for a significant move to the downside during Q1/Q2. The chart below is a Weekly SPX chart rather than the normal Daily count. I think this view is helpful in eliminating some of the noise. I believe the Index is forming a top in the broader range of 5864/6100 with peak-to-trough downside targets of 5100 (down ~16%) and 4800 (down ~21%). These targets are very reasonable, and I believe they will be achieved by the end of Q2. Let’s see how price and internals progress through January.
Trade Support:
5864: Nov 6 Open/Low (TESTED AND HELD)
5700: Oct 31 Low/Bottom of Gap
5100: Intermediate Term Downside Target
4800: Intermediate Term Downside Target
Trade Resistance:
6000: Previous Support
6100: Dec 6 High
